According to Anthony “The Pomp” Pompliano, we can expect a recession that will be far worse than the Great Depression of 1929 and the early 1930s. He reports that unemployment numbers at best have a one-week lag time, and on the ground, it looks far worse. States anticipate an explosion in economic data after reopening the economy. However he sees this as a likely “Dead Cat Bounce.”
He bases this analysis on the post-COVID recovery in China, which then stabilized with a net loss in economic activity. He expects that small businesses will remain out of business. Consumer behavior has changed. Anecdotally, many people will be less likely to enter crowded bars and restaurants, and will be less likely to take unnecessary flights. He also sees people realizing that they can continue to cut their spending.
The stock market is still doing well, but Pompliano believes this to be due to the activities of central banks, rather than as an indicator of the actual economy. He does not own public stocks, and is not a public stock investor. But according to his analysis, he expects there will be a leg down on the stock market soon, catalyzed by the shock to investors that there will not be a V-shaped recovery in economic data.
The Pomp sees the virus as accelerating trends that already existed. He also sees it as exposing “shams” in the economy. One example is higher education, which does not actually require on-site students and professors. Another example he cited was retail, where businesses are moving online.
In the future, he expects that people will seek to create resilient companies, based on changes in consumer behavior.
Investment Predictions
Stock Market
There is a disparity between stock market numbers and what people are reporting on the ground. Therefore, he thinks there will be a repricing of the stocks to meet the economic data.
Real Estate
In real-estate, we have not seen a correction yet, but he sees this as coming. He thinks there will be some slow deals, but there will be a correction in residential and commercial retail where deals get minted at lower prices. At this point, there will be an acceleration.
Oil Futures Contracts
In the oil market, geopolitical chaos will continue to play out. He thinks this will have some positive impact, but the economy will not open fast enough to raise recovery-level demand for oil. Oil reservoirs are full and he said he wouldn’t be surprised to see negative futures contracts again in June.
Gold, Bitcoin, and Other Crypto and Precious Metals
He sees central banks trying to print their way out of this. As they print more money, it will be devalued, which will harm the bottom 50% of citizens while enriching the top 50%. People will fear inflation. So whether inflation happens or not, people will invest in gold, bitcoin and other inflationary assets. He saw these types of assets perform well due to the fear of inflation in the historic record.
Dennis Consorte has an appetite for news and information about cryptocurrencies, blockchain, IoT, fintech, adtech, martech and other technologies. He also has over 20 years’ experience in digital marketing and content strategy.
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